[holding answer 22 January 2007]: The most recent discussions I have had with the Mayor of London which included references to the budget of the 2012 Olympic and Paralympic Games were on 23 January. Prior to that we had met on 13 December 2006 at the Olympic board, which I jointly chair with the Mayor, and at which budget issues were discussed. We subsequently met again on 14 December and talked about the budget as part of a general discussion on Olympics and other issues.
The Government’s aim is to maximise private investment in the 2012 Olympic Games and Paralympic Games wherever possible.
Two bodies have been created by the Government and Key Olympic Stakeholders, the Olympic Delivery Authority (ODA) and the London Organising Committee for the Olympic Games and Paralympic Games (LOCOG), to oversee the construction of the Olympic Park and to organise the staging of the Games, including investigating public private partnerships and raising the £2 billion in sponsorship this will require.
LOCOG has been working closely with companies in six sectors (banking, insurance, oil and gas, automobiles, telecommunications and utilities) to explore partnerships at the tier one level. LOCOG remains on target to announce its first major sponsor by the end of the financial year.
With regards to initiating public private partnerships and private finance initiatives, the ODA will be looking into the possibility of securing these as part of individual procurements, subject to the overarching priority to deliver the Games on time. As a result, the ODA will seek private sector investment in utilities and other assets which have long-term investment potential.
The Games will present many more opportunities for private funders to invest in a variety of projects stimulated by the creation of the Olympic Park in East London. For example, the John Lewis Partnership has already announced plans to invest £50 million and create 800 jobs in the Stratford City retail project, adjacent to the Olympic Park. We are keen to encourage similar investments to accelerate the regeneration in this deprived part of London and in schemes throughout the country to ensure that the Games leave a lasting and sustainable legacy for the UK.
[holding answer 26 January 2007]: The memorandum of understanding between the Government and the Mayor of London on Olympic funding was published on 30 June 2003 by the Department for Culture, Media and Sport in Command Paper Cm 5867 entitled Government Response to ‘A London Olympic Bid for 2012’ (HC 268) Report of the Culture, Media and Sport Select Committee Session 2002-03 and copies were placed in the Libraries of the House.
[holding answer 26 January 2007]: The contribution to the Olympic Village and the broadcasting/media and press centre are subject to commercial negotiations with private developers. In view of that and to avoid speculation about the size of the public contribution I will be able to provide the information requested only when the commercial negotiations are complete.
The PricewaterhouseCoopers Report was used to inform the cost estimates. Between the delivery of their report, in July 2004, and the submission of the Candidate File to the IOC, in October 2004, a number of cost savings were identified. The estimates included in the Candidate File reflected these savings.
[holding answer 16 January 2007]: As I explained to the Select Committee in my answer to their written questions of 28 November, the c.£400 million includes not only the costs of the delivery partner but also the costs of site mobilisation and the costs of additional staff required by the ODA itself.
[holding answer 16 January 2007]: The new or additional elements of expenditure for the Olympic Park that make up the £900 million that I announced at the Culture, Media and Sport Committee on 21 November 2006 include provision for:
ODA delivery costs (£400 million): This reflects a detailed review of the ODA administration requirements for the programme including the estimated costs of the delivery partner. The delivery partner will provide the level and quantity of experience and skill needed to deliver the Olympic Park project and to undertake effective project and programme management and cost control. The additional costs cover this, accommodation and site mobilisation and ODA staff costs.
Construction inflation: A 1 per cent. point per annum increase in inflation costs is required in order to reflect post-bid increases in inflation;
Additional security costs: reflecting the need for increased investment in site security post 7 July 2005. This does not include general policing costs which fall outside the core costs of the Olympic Park;
Olympic Village and International Broadcasting Centre/Media and Press Centre: Some public investment will be necessary to underpin the private sector investment in these facilities but these are both subject to commercial negotiation about what the level of private sector investment will be.
These cost increases will be reflected in the ODA’s budget which is due to be determined in the next few months. They do not include VAT or programme contingency, which as I told the Culture, Media and Sport Select Committee on 21 November, are a matter for discussion in Government.